Orange re-bundles broadband

It's the new unbundling

Orange is to give up running its own broadband network, and will rebundle its service to leave BT Wholesale to compete with itself.

Orange will hand over its existing infrastructure to BT Wholesale, and will continue to operate as a bundled broadband provider in the same mould as Vodafone, Tesco and the dozen or so other ISPs that resell BT's connectivity.

For years the internet service providers fought with BT for access to the local exchanges so they could fit their own ADSL connections. Unlike the previous generation of modems, which could connect a customer directly from their home to the ISP's offices, ADSL can only connect the user to the local exchange, and as long as BT had the keys to that exchange no-one else could sell ADSL.

The process of permitting other ISPs into the exchange is known as "Local Loop Unbundling", and these days the keys to the exchanges are owned by BT OpenReach, and almost every exchange in the UK is now open to other ISPs. In fact many exchanges remain exclusive to BT Wholesale for economic reasons - only BT has the necessary scale.

Orange isn't the first company to decide that duplicating the kit isn't worthwhile. Most operators unbundle the more-popular exchanges then resell BT everywhere else.

Unbundling does give the ISP compete control of the connection which can be useful for premium services. TalkTalk, for example, only offers its TV service on unbundled exchanges, where it can guarantee the bandwidth, but that needs an economy of scale that Orange can't replicate.

Orange's UK broadband offering has been in decline for years, and the company toldThe Times that "We are not satisfied with where we stand with broadband, as our customer base is declining and our performance is poor. But we need to remain in fixed-line broadband so decided to fundamentally change what we are doing".

With Orange in the process of merging with T-Mobile it makes sense to clear up the peripheral operations - T-Mobile doesn't offer ADSL in the UK, so T-Orange (or whatever it decides to call itself) will be free to resell BT Wholesale's service under it's shiny new brand. ®